The January bloomer

In an extraordinary admission, the Ministry of Statistics and Plan Implementation said that it had gravely erred in the calculation of the index of industrial production for January 2012.

When the index was issued a month ago, eyebrows were raised quizzically as, in regard to the production of consumer non-durables, the growth rate for the month had bucked the trend, it being as high as 42.1% as against a mere 5% during the same month of 2011.

Now, the mystery has been unravelled. Faulty reporting of sugar production is to blame for this major blunder. According to the secretary of this ministry, TCA Anant,  in the compilation of the January index, sugar production was taken as 134.08 lakh tonnes  instead  of the actual 58.09 lakh tonnes.

He blamed the Directorate of Sugar for this misreporting. But the consequence was, to put it mildly, grave. The growth rate in the consumer non-durables segment — to which sugar belongs — plummeted to 11% from the provisional figure of 42.1% for January and the cumulative growth rate to 2.9% from 20.2%.

The effect of this statistical error, together with the usual revisions  on the overall index of industrial production was serious and severely distorting - the industrial growth rate for January was  pruned to 1.1% from the earlier reported 6.8% and the cumulative growth to 3.4% from  4%.

A few questions are germane in this context. At the compilation state of the industrial index, how the erroneous reporting of sugar output during January had gone unnoticed.

Surely, the figure of over 134 lakh tonnes for this month must have been enough to have a second look at the data.

Also, it surely has bucked the trend of the previous months and, if so, how this could have been overlooked at that point of time.

Moreover, at the level of working out the aggregate indices for the various segments, the fact that something is fishy about the index for the consumer non-durables segment is evident from a mere look at the indices and the growth rates.

Clearly, timely and accurate submission of factory  production data is at the heart of a reliable index of industrial production. The serious error in the reporting of sugar output has only serve d to spotlight on the official machinery in charge of gathering the vast mass of data involved in the construction of this index.

It needs further toning up as much as those in charge of collecting, collating and compiling the index must take their job seriously. At  the basic level, they must be alert to any sharp deviation of data from the observed trends.

The lapse in the case of sugar has highlighted this problem. One would have thought that, issues of this sort would have sorted out when the new industrial index made its debut last year. This is not the case.

Anant’s observation that he had asked the agencies to submit the data on time suggests that something is amiss on this score. His averment that the Central Statistical office would constitute a committee to look into data collection methodology, among others, suggests that the industrial index still suffers from deficiencies and the volatile nature of some of the component indices may be a sequel to this.